The Long Tail Effect Theory in Practise Explained

The Long Tail Effect theory in practise explained

The long tail is a statistical pattern of distribution that occurs when a larger share of occurrences occur farther away from the center or head of distribution. This means that a long tail distribution includes many values that are far away from the mean value. In an economics context, this signifies that more products are purchased that are different from the most mainstream products.

Wired Editor-in-Chief Chris AndersonChris Anderson popularized a theory about the long tail effect in a book first featured in Wired in 2004 and later published by Hyperion in 2006. The book became a New York Times bestseller and won the Gerald Loeb Award for Best Business Book of the Year, simply titled The Long Tail. Anderson theorized that consumers in the modern economy are increasingly shifting away from a smaller number of popular “hit” products (these make up the head of the curve). Instead, more and more people are buying individualized niche products (located in the long tail). This is possible because in an increasingly globalized economy, production costs are lower, making it easier to produce items in smaller groups. The rise of internet business also means that fewer stores must constrain themselves to the limits of shelf space and can stock a wide range of items. Ultimately, this creates more choices for the consumer.

The Long Tail Effect theory in practise explained

Businesses can benefit from this trend by stocking a variety of individualized, niche items. Given enough traffic, products that have a low sales volume can collectively make up a market equal to or larger than that of the most popular, best-selling items. According to Anderson’s theory, this will become increasingly true as economic culture shifts farther away from monogamous, trend-following purchasing. Modern customers are becoming more interested in products and services that seem unique and fit their individual needs and tastes, creating more demand for a greater number of more unique items.

One company that has employed the long tail effect with great success is Amazon. As an online retailer, Amazon can stock a vast number of different products and therefore meet the needs of many different individuals. A large proportion of Amazon’s sales come from obscure books that may not be available in traditional brick and mortar stores, rather than popular best sellers. Because Amazon can provide niche products, it can appeal to many different customers with diverse interests. Many other businesses, particularly those involved in online retail, may be able to profit from a similar strategy. Popular online companies such as itunes and Netflix generate a lot of revenue from selling small numbers of many different, less popular items that appeal to a wide range of customer preferences. 3D printing company, Shapeways, is capitalizing on people’s interest in unique items by offering products that can be individually designed and then produced. These customized sales make up a large percentage of their profits.

The long tail effect can also be applied to online marketing and website content. Google and other search engines have realized that many internet users are hoping to find online businesses and websites that are tuned in to their particular searches. Therefore, rather than prioritizing the most popular, general sites, Google can show search results that more precisely match an individual search.

Website managers can take advantage of this trend in order to bring in more traffic. A blogger, for instance, might think that writing a general post on a very popular subject might bring in the most traffic. It’s true that many people might do a Google search for the most popular, basic subject, but there’s going to be lots of competition, making it difficult for one blogger to bring in traffic. More individualized, niche topics might have a smaller target audience, but they will also face less competition. The blogger, for example, might want to write about travel in Europe. The topic “Budget Travel in Europe” is a popular subject, but the post will likely be lost in a sea of search results. “Choosing a Budget Hostel in Paris,” however, is much more specific. There may be less people searching for that individual topic, but there will also be far less competition. A searcher who wants answers for their specific needs will choose the more individualized topic over the broader one.

The most effective way to maximize search engine optimization and bring in more website traffic using the long tail theory is to create a large number of pages that appeal to niche markets. If our blogger, for instance, were to write posts about 10 different countries in Europe, she would be very likely to bring in more traffic than she would with one general post about all of Europe. The same theory holds true for all kinds of websites and online businesses. Creating multiple pages with slightly different titles and keywords can help to draw in more visitors.

Some people, of course, have questioned the validity of the long tail effect. It is almost unquestionably applicable to areas such as search engine traffic and some kinds of online retail. Certain markets are not seeing the long tail expand to the same extent, however. The digital music industry, for example, may in theory be able to capitalize on offering a wide variety of less popular songs. However, the Times of London reported that over 76% of songs available for digital sale were not purchased by a single buyer. That means that the majority of digital songs that made money were still popular hits, rather than obscure music. The long tail, in this case, may have some limits. Similar patterns are true for movie and other entertainment sales. It’s true that online companies such as Netflix and Quickflix can offer an ever-widening selection of different movies. Much of their traffic and profit still come from people watching or purchasing the same popular titles, though.

This doesn’t mean, however, that the long tail effect theory is inaccurate. It seems clear from just a glance through online retail that every day more customizable and obscure products are being offered and purchased by interested consumers. There will still be trends and hits that generate a larger bulk of profit. After all, it seems unlikely that we’ll ever be without hit music or blockbuster movies. These popular items are always going to draw a lot of attention and revenue. But increasingly, attention and profit are also moving towards smaller, less popular items in the long tail, and it’s affecting the way both consumers and producers can act.